subject: Tackling Those Easter Renovations Without Breaking The Bank by:Daniel Musson [print this page] Whether its the economic downturn causing home-owners to focus on improving their existing home rather than moving house, or a desire to build equity, the fact is Aussies around the country are madly renovating.
And with Easter around the corner, I imagine DIYers around the country are dusting off the tool boxes and getting the paint brushes out of retirement for an Easter working bee (much to the disappointment of the kids, whod far rather be heading to the beach for the weekend!).
But renovations cost money. And charging up the credit card to help pay for the new deck is not a great wealth-creation strategy.
The good news is that because a huge number of Australians have been doing the smart thing with the recent rate cuts and maintaining their prior repayment level, they might just find they have a big pool of cash available in their redraw facility.
Obviously Im not recommending you plunder every cent thats available on your mortgage, but re-drawing is actually a much smarter option than loading up your credit card or taking out a new loan.
With re-draw, there are usually no fees or charges for taking back the money, so all you lose is the gains you would have made in terms of reducing the interest.
And if you think about the equity you are building in your home, this may outweigh any extra interest you pay.
Its not the solution for everyone and will of course depend on your own home and whether you can add value without over-capitalising, as well as on your own financial situation, but in these lean economic times its worth considering every option.
So if you are one of the many Aussies considering renovating this Easter weekend and youre wondering where youll find the cash, have a chat to your bank or your financial advisor about the options available to you and whether re-draw is the way to go.
Of course if youre leaving the drop sheets and paint brushes at home and heading to Noosa for the weekend, good luck to you! Have an extra mango daiquiri for me.
According to the Australian Institute of Architects building advisory service, Archicentres Trends in Contemporary Home Renovation Report of November 2008.
About the author
Daniel Musson is BOQ Group Executive who writes opinion pieces regarding topical financial issues including cheap home loans, home loans interest rates and savings and investment advice for consumers.
